Absorptive capacity, technological innovation capability and innovation performance: an empirical study in Hong Kong

This study examines how different learning processes associated with absorptive capacity (AC) influence technological innovation capability (TIC) and lead to superior innovation performance and product competitiveness under a new industrial environment. Data from an industrial survey conducted in 200 firms in Hong Kong were used. The results show that combination of four individual learning processes (acquisition, assimilation, transformation and exploitation) of AC provide a better fit of the study rather than any single construct. All the learning processes affect innovation performance through TIC. Assimilation and exploitation have direct effects on product competitiveness. The finding from this study contributes to the understanding of how the learning processes of AC relate to TIC and firm performance. This study also addresses many current weaknesses of the use of AC in empirical studies by using direct measures of AC by breaking down AC into four separate components and studying the intangible outcomes of AC.